Foundation of a company in the Czech Republic
Set up a company in the Czech Republic – The procedure of starting a business Despite the growing tendency of bureaucratic…
Set up a company in the Czech Republic – The procedure of starting a business
Despite the growing tendency of bureaucratic hurdles, according to the model of business environment in the Slovak Republic, starting a business in the Czech Republic is still worth it.
Quick management of applications, good communication with the authorities, absence of paying a security deposit during the VAT registration – these are further advantages that attract investors and businessmen from the neighboring countries. The expansion to the foreign market of the Czech Republic is not hindered by any excessive bureaucratic demand in the form of 2 months of “administration” and unnecessary costs for the establishment of a company, compared with the Slovak Republic. The following information will show you the process of setting up a limited liability company in the Czech Republic, including also the fees and deadlines related to the establishment of a business organisation.
Advantages and main reasons for setting up a company in the Czech Republic
- Limited liability up to the amount of contribution of the partner
- The minimum contribution of each member under the valid regulations is CZK 1
- Minimum share capital of the company is CZK 1.
- The personal income tax is 19%, while the VAT rate is 21%.
- When transferring a business share, the consent of the tax authorities is not necessary, while it is required in the Slovak Republic
- Easy registration of the company for VAT
- Registration of vehicles in the Czech Republic – the minimum registration fees
- Employees with employment contract for a limited number of working hours do not pay contributions to the social and health insurance fund
- No compulsory annual fees in the form of tax license
Process of and information on setting up a company in the Czech Republic
The procedure for establishing a company in the Czech Republic is similar to that in Slovakia. It is essential to issue the complete documentation according to the legal requirements, to visit some authorities and institutions and to pay the administrative fees.
Before starting a business, it is necessary to think of an appropriate business name which must be unique and distinctive from another business name already registered in the Trade Register – any duplication can be checked at the Trade Register. Another essential part of your business is the head office of your company, the appropriate scope of business, the amount of the registered capital, the determination of the administrator of the deposit, the appointment of the executive and partner in the Czech company.
The phases of the process
- 1. Issuance of instruments and conclusion of the articles of association / deed of foundation in the form of a notarial deed
- 2. Placement of the registered capital of the company in the bank
- 3. Obtainment of the trade license for conducting business activities
- 4. Submission of the application for the company’s incorporation, including also the annexes necessary for the registration
- 5. Registration of the company at the tax authorities
We can set up a company for you in the Czech Republic within 24 hours. In this case, personal presence at the notary in the Czech Republic shall be necessary.
Documents required for the establishment of the company
The most important document for the establishment of companies in the Czech Republic is, of course, the articles of association or the deed of foundation. Unlike in Slovakia, it is necessary to issue it in the form of a notarial deed. Normally, also an authorization to conduct business activities is attached, here in Slovakia, known as a certificate of licensed trading, respectively, trade license. This authorization is issued by the local trade licensing authority. For this purpose, it is necessary to ask also for an extract from the registry of criminal records, which shall, however, be attached only in case of persons who are not citizens of the Czech Republic, respectively, who do not have a permanent address in this country. The duly signed declaration of honour of the executive shall be attached, as well. Its purpose is to make a declaration about the consent of the executive to the performance of the executive function, legal capacity and fulfilment of conditions for conducting business. To demonstrate the disposition rights of the head office of the company, the consent of the owner of the real-estate is normally sufficient. The registered capital must be paid into a bank account. The bank will issue a certificate to you which must be a part of the annexes based on which the Trade Register will perform the registration of the company.
What are the fees for setting up a business organisation in the Czech Republic?
- Notary – notarial registration CZK 6,000
- Trade licensing authority – duty stamp of a value of CZK 1,000 for the first trade license and CZK 500 for each additional trade license
- Trade register – application for the registration of the company; duty stamp worth CZK 6,000
Deadline for the foundation of a limited liability company in the Czech Republic
In our experience, it can be stated that the establishment of a business organisation in the Czech Republic usually takes 3 weeks. The deadline of the trade register to perform the incorporation is 5 working days. Currently it is possible to set up a company also expressly, in 24 hours. However, this requires personal presence in the Czech Republic.
Is it necessary to travel abroad to be able to establish a company in the Czech Republic?
For the establishment of a company, it will not be necessary for you to travel to the Czech Republic. A notarial deed can be done on behalf of you on the basis of a power of attorney.
